Apparent steel consumption in Europe turned the corner in the first quarter of 2010, growing by almost 23 percent year on year following nine quarterly declines in a row and a 35 percent reduction in apparent steel consumption in 2009, according to the third quarter report of the ‘Economic and Steel Market Outlook 2010-2011', released by the European Confederation of Iron and Steel Industries (EUROFER). With real steel consumption still at a subdued level, the inventory cycle has been the driving factor behind this marked improvement. In contrast, the same quarter of 2009 had been characterized by extremely weak final consumption, heavy de-stocking and EU mills seeing orders and deliveries falling off a cliff.
According to EUROFER, despite stocks being replenished again, overall inventory levels have risen only very modestly since the start of the year. Data on stocks in the steel distribution chain reveal only a limited rise in strip mill product inventories and stock-sales ratios remaining at approximately two to 2.5 months of current consumption. Generally speaking, overall stocks including those at end-users are assessed as normal in relation to the prevailing market conditions.
Particularly EU mills benefited from this improvement in steel market fundamentals. Up to now, imports remained at moderate levels although they have been on a rising trend since bottoming out in the third quarter of 2009. First indications for the second quarter of this year signal a continuation of the positive trend seen in the first quarter. The impulse from the inventory cycle is expected to lose strength in the remainder of the year. Nevertheless, total apparent steel consumption is projected to rise 17 percent this year, said EUROFER, revising its previous forecast at 12.5 percent
In 2011, the anticipated rebound in real steel consumption will provide the main support to the projected five percent rise in apparent consumption as the positive impact of the inventory cycle is seen to ease further. However, EUROFER previously foresaw that apparent steel consumption in 2011 in the EU would be 7.5 percent.